March 10, 2015
Mish's Daily
By Mish Schneider
South Park Margaritaville Episode
Following inside day patterns in all 4 indices, they all reconciled to the downside, with certain instruments going s-p-la-t!
We have unconfirmed warning phases again in both the S&P 500 and the Dow. The Russell 2000s or small caps held up the best, holding just under the January 6-month high 120.56 and above the 50 DMA. Although NASDAQ had the largest percentage drop, it remains the furthest from its 50 DMA. Concerning the SPY and DIA, they will require a second day closing under the 50 DMA to confirm those warning phases.
At the risk of sounding like J.K Simmons during his acceptance speech after he won the Oscar for Best Supporting Actor in “Whiplash”, I really do call my mother every day. Monday night, her first words to me after she saw the daily email were, “What? You back to sheep again?”
Speaking of, the question on my mind, as I am sure you have anticipated would be, is when is it safe for our flock to come back to pasture? By the way, has anyone noticed the titles of the dailies are often almost an eerily theme the following trading day? For example, Sheep Will Flee In Random Directions certainly describes Tuesday’s action.
So what can we look for now? Besides a second close under the 50 DMAs in DIA and SPY (which would not be a case for risk on), we prefer to see both recapture their 50 DMAs and if that transpires, then we will look for strength in IWM and NASDAQ as well.
Interestingly, there are several stocks that performed well in the face of Tuesday’s decline. A good rule of thumb-sort of Darwinesque one might say-is to find the instruments that outperformed, or the Sheep that exemplify the survival of the fittest, and keep your focus there.
S&P 500 (SPY) We have added the 100 DMA which comes in at 204.10 to the charts. Resistance now is at 206.10
Russell 2000 (IWM) The 50 DMA 119.48 and the January Calendar Range high is 120.56. Those are my swing points
Dow (DIA) 175.90 is the 100 DMA and 177.80 the 50 DMA
Nasdaq (QQQ) 104.50 the 50 DMA and 106.25 the point to clear
XLF (Financials) Broke support and the one that has made me wary all year seeing as it never took out the highs of January 2nd-the black sheep
KRE (Regional Banks) 39.16 is where 3 moving averages line up and 40.40 a good point to clear
SMH (Semiconductors) 55.04 the 50 DMA to hold
IYT (Transportation) 155 could be next stop unless this makes a surprising run over 160
IBB (Biotechnology) 340 now pivotal
XRT (Retail) The topping formation I wrote about last week-now we want to see support at 96.11
IYR (Real Estate) Another narrow range day sort of in the middle of nowhere
GLD (Gold Trust) 111 some support
GDX (Gold Miners) Oversold and close to the 2014 low 16.45
USO (US Oil Fund) The light volume never would have gotten us long, and today we saw why-broke 18.00 after nearly 6 weeks closing above it
TAN (Guggenheim Solar Energy) Please remind me to get back in close to 40.00
TBT (Ultrashort Lehman 20+ Year Treasuries) After Retreating from the 100 DMA, the TLTs gapped over its 100 DMA
UUP (Dollar Bull) could be extended -which actually, would be received as a relief if comes off a bit now
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